The ROI of e-document delivery
The ROI of e-document delivery
Electronic invoicing can be a 'no-brainer'
By Esther Shein
FRAMINGHAM (04/06/2009) - From Fairbanks to Phoenix, employees in the branch offices of North Coast Electric Co. are likely singing Rick Bumpus' praises these days, and with good reason. Bumpus, executive vice president and chief operating officer for the electrical equipment distributor, has found a way to save remote employees the tedium of having to manually print and send out hundreds of invoices every day. And he's saving his company money, to boot.
During the process of moving to a new ERP system, Eclipse -- made by Activant Solutions Inc. -- a couple of years ago, Bumpus learned about a third-party firm that provides electronic document delivery, a feature Eclipse didn't have. Bumpus liked the fact that Billtrust offered a hosted service that would take the hassle out of the invoicing process for North Coast Electric's 34 service centers.
He had originally intended to wait until Eclipse was in place for a while before implementing another software package, but changed his mind when he heard what Billtrust could do.
"The case for changing our billing process was so compelling . . . we went live with Billtrust at same time we started with Eclipse,'' says Bumpus, in Seattle. "Now, instead of people having to set up manual processes and dealing with paper, we send an electronic file to Billtrust every night via FTP, and then they process it according to the business rules we predefined, and [the invoices] are mailed off and they handle it."
When the customer selects the e-mail option, the customer receives one e-mail anytime he has a bill. A PDF is attached; each invoice is a separate page of that PDF. If the customer chooses to print, each invoice appears on a separate page.
If customers choose the "Invoice Gateway" option, they can view their invoices on the Web site. They can then choose to pay their bills online and leave them in online storage with no paper, or they can print out their bill as a PDF. For some services -- including contractor estimating packages or QuickBooks -- customers can directly import the invoice into their software, bypassing printing entirely.
How it works
Electronic document delivery automates the sending of high-volume documents such as invoices, financial statements, letters and reports by taking a business application file that has been tagged with individual e-mail addresses and securely "blasting" it to multiple recipients at the same time.
Both the hosted model and on-premises e-delivery software packages are experiencing big growth, notably in small- to medium-sized firms, says Jennifer Roth, an e-payments analyst at Tower Group in Needham, Mass. Industry observers say e-document delivery streamlines the billing process, reduces time-consuming manual tasks and saves companies significantly on paper and postal costs.
"Businesses are looking at ways to take paper out of the process and put things online while complying with regulatory requirements, depending on the industry,'' says Roth, who sees usage of electronic document delivery particularly strong in the insurance and utility industries.
The time is ripe for e-documents, Roth continues, given the increased emphasis on companies going green. "Businesses are trying to do their part, so it's another reason why you may not have seen this couple of years ago; this is part of our own social responsibility."
Also propelling growth is that e-document suppliers are making it easier, says Sush Koka, a research director at consulting firm PayStream Advisors, Inc. in Charlotte, N.C. These days, many e-document vendors are delivering value-added services around supplier recruitment, says Koka, in Houston. For example, suppliers like Xign, acquired by J.P. Morgan, can go through a company's lists of suppliers and buyers and identify which are good e-document candidates. Then the suppliers contact these other firms on the company's behalf to educate them on the benefits and enroll them for e-document delivery, Koka says.
Implementing or increasing electronic invoicing was identified as the highest priority for 2009 for 48% of more than 300 financial professionals, according to PayStream Advisors' Imaging & Workflow Automation Adoption Survey, conducted during the last two quarters of 2008. Not surprisingly, more than half of those respondents reported that they presently receive over 80% of their invoices in paper format.
From an earlier PayStream report: "Our research shows that by 2010, the number of B2B invoices delivered within the United States in electronic format will exceed the number of paper invoices."
A 'one-man show'
While electronic invoicing is among the more popular applications for electronic delivery, many products and services also provide the ability to blast out financial statements, reports and payment histories as well.
That's what Brad Barron had in mind when he was looking for some other way to deliver internal financial reports. Barron, pharmacy systems coordinator at Bashas' United Drugs, a 75-year-old regional supermarket/pharmacy chain based in Chandler, Ariz., is responsible for all corporate reporting for the company's 64 pharmacies.
"I'm kind of a one-man show... and as we grew, that task became more and more cumbersome,'' notes Barron, who administers the system used to produce and bill prescriptions. Barron was spending hours producing reports and then faxing them or attaching PDFs to e-mails and sending them out on a twice-a-week basis.
"I got to the point where I was sending out 600 reports a week manually that way, and it was taking me literally four to five hours a week just in the delivery process."
Barron does all his financial reporting in a data warehouse and then moves the information into Microsoft Access. The information includes business analysis, the number of prescriptions being filled and their retail value. Some stores receive as many as 10 different reports of between one and four pages each twice a week, he says.
"My main interest wasn't from a corporate standpoint as far as ROI; it was my time,'' he says.
About a year ago, while doing an Internet search, Barron came across PDF-eXPLODE, software that takes a master PDF file and splits it into individual attachments based on hidden tags in the original document. The software then distributes each PDF either via e-mail or fax to the recipients, while preserving the original appearance of the documents.
After conducting a trial, Barron purchased PDF-eXPLODE, from United Data Strategies, Inc., for $395; the process of configuring it for the Access database took about 30 days, he says.
Barron now saves between four and five hours a week just on the report delivery process and says that translates into a savings of two weeks of his time per year. In addition, "When I was electronically faxing these reports ... I know it was huge expenditure of paper."
He says it was very easy to set up the electronic tags in a report database and then generate the reports by using the print function. "I just go in and click 'print,' and the PDF acts just like a printer in Windows. It dumps the reports into a print spool and I set up e-mail addresses where the reports have to go and it sends them."
Barron generates a report with each store's individual sales figures, and the software sends the appropriate information to the appropriate store based on the e-mail addresses he inputs. "It takes one 64-page PDF file and knows which store to send which report to, all done automatically; all I have to do is print one report,'' he says.
Barron calls the software "phenomenal, exactly what I was looking for. I'm constantly using it as I expand my range of reporting ... It saves me a lot of time and hassles."
Immediate savings realized
Feroz Merchhiya experienced a similar situation to North Coast Electric's since his Great Plains ERP system (now also called Microsoft Dynamics GP) couldn't send out financial statements electronically. Merchhiya, senior program manager at Intuit-owned Digital Insight, which provides online banking and related products for banks, says his company's customers have multiple ways they want invoices sent, and whenever Digital Insight needed to generate one, it became a cumbersome process.
An earlier electronic delivery product Digital Insight tried had issues with scalability, maintenance, support and, ultimately, performance. So the finance group abandoned it and went back to its manual methods, Merchhiya says.
Eventually, Merchhiya came across PDFBlaster, from Data Fabrication Inc., and liked its simplicity, ease of implementation and, above all, the vendor's willingness to support the product. After an extensive test cycle, Digital Insight implemented the product about a year ago.
While Merchhiya won't disclose what he paid for PDFBlaster, he says "it has basically met our expectation in terms of ROI," and Digital Insight has saved $484,000 in the first year. In first month alone, he says, the company saw an immediate savings of $40,000.
Digital Insight has also reduced days sales outstanding (DSO) by 10 days in terms of producing and mailing invoices. DSO measures the average number of days a company takes to collect revenue after a sale has been made. This is relevant because the faster a company can turn sales into cash, the sooner it can reinvest the cash and make more sales.
"When you are looking at reducing the time between when you invoice your customer and when you receive the payment, the sooner it hits your books the better,'' says Merchhiya, in Westlake Village, Calif. He says his company sends out 2,000 or more invoices monthly, and in the first phase it has already reduced the amount of paper generated by 40%, which meets Intuit's "very aggressive corporate social responsibility goals." Digital Insight has also saved 24 hours of labor per month by eliminating the manual efforts involved in generating and transmitting the invoices.
"You choose a print function that goes into the PDFBlaster queue and you set your delivery method preference,'' such as fax or e-mail, he says. Users can also schedule the date and time the invoice goes out.
Bumpus from North Coast Electric also found the payment process has been shortened by the ability to get invoices into customers' hands a day earlier than if they had been directly mailed from the individual service centers. He says Billtrust attributes that to its targeted bundling with other companies' mail that streams through the post office quicker.
However, Bumpus says the fact that invoices arrive sooner doesn't necessarily translate to his company getting paid quicker, especially since their terms haven't changed, but he says customers like getting their invoices quicker so they can bill their own customers sooner.
North Coast sends out some 300 to 400 invoices a day and Billtrust charges North Coast per electronic invoice. Exact rates vary by volume, but Bumpus says "they charge by the envelope. So if there is one invoice, it costs the same as if we had three invoices in the envelop." As a result, North Coast is saving about 75% in mailing charges.
"I didn't do a detailed ROI. It was such a no-brainer for me; the most it's going to cost is the postage," Bumpus says, because Billtrust gives volume discounts by the way they're able to sort the invoices among multiple clients.
Sending financial documents electronically "helps take friction out of the supply chain,'' Bumpus says. "That's really what we work on."
Esther Shein is a freelance writer and editor. She can be reached at email@example.com.